Why You Conspicuously Avoid the Cheaper Wine

By Kelli B. Grant

Any diner on a budget has probably faced the wine list with the following strategy: Not the cheapest bottle, maybe not even the second-cheapest, but something a little better would do nicely.

New research suggests that’s not simply frugality at work. When faced with several items in a high-end category, consumers avoid picking the cheaper options, according to “The Discriminating Consumer: Product Proliferation and Willingness to Pay for Quality,” a study in the Forthcoming Journal of Marketing Research. In one experiment where participants were asked to choose one of nine different Sauvignon Blancs, only 25% chose one of the three cheapest bottles. The rest picked a more expensive wine.

Study co-author and Columbia Business School professor Sheena Iyengar says that is because with high-end items, price can serve as a signal for quality. That’s less true for commodities like light bulbs or notepads, but once the idea of quality is introduced, either subtly, like listing bottles from least- to most-expensive, or overtly, by advertising “premium” selection or features, that takes precedence, she says. “The more choices you have, the more likely you are to look for anything to make that choice easier.”

What it boils down to: frugal has become cool in recent years, but no one likes to look cheap. If paying a little more seems to come with a big boost of quality, consumers will jump, says Iyengar. Stores, restaurants and other businesses have been wise to this for a long time. It’s why restaurants, for example, typically offer some of the biggest mark-ups on their wine list’s second-cheapest bottle.

Earlier studies have found that consumers can be so overwhelmed by choice that they buy nothing, and that may be the better option for consumers watching their budget who don’t need to make an immediate buying decision. Price compare the items online (or via smartphone) and check consumer reviews if possible to see if paying up really does offer more bang for your buck.